Pressure Is On IBM To Forgive Millions In IT Debt 458
coondoggie writes to tell us that several California state legislators are pressuring IBM to release the Costa school district from some $5 million of long-standing debt as a charitable donation. "The back story on this tale is that the school district owes IBM for computers ordered in the late 1980s and early 1990s. For one reason or another the computers were never used and no one now seems to be able to locate either the paperwork or the hardware. The school district experienced hard financial times and ultimately never paid Big Blue for the computers. In 1993 the district and IBM negotiated a long-term settlement that said the school district would pay the first of four $1.25 million installments beginning in 2008. Payments were deferred until then because 2008 was the year the district was scheduled to finish making state loan repayments under its previous loan plan, according to the Contra Costa story."
15 years (Score:2, Insightful)
Re:15 years (Score:5, Insightful)
Re:15 years (Score:5, Insightful)
It sucks that elected representatives do this so often, but what's the answer for it? The people doing it know they won't be there to answer for it! Kind of like our current administration at the federal level pissing away money on Iraq while the situation there gets worse every day, and leaving it to the next administration to make the hard decisions and clean up the mess.
Re:15 years (Score:5, Insightful)
Except the school board isn't stuck with the bill. At least in that the individuals on the board don't have to pay it. It isn't going to affect their salary or anything in any way. The money will have to come from them cutting back on other educational expenses. So the people who are going to suffer are the kids who weren't even born when the deal was made.
Re:15 years (Score:5, Insightful)
Re:15 years (Score:5, Insightful)
They had a inept, corrupt school system. 5 Million in computers go poof! Is their outrage? Who's head ended up on the block? Who had to pay for this? So far no one. IBM has been nice, and has made a 15 year 5 million dollar interest free loan.
People 15 and 20 years ago were responsible for this. The city, the school board, the voters and tax payers. They did not pay the piper....It has been put off till now. It is time to pay.
If the city had taken out loans, were improving the school district, etc. Then there was some big natural disaster, something beyond their control. I could see IBM feeling generous and forgiving the debt. But this is due to the school districts own stupidity.
If a car lot (yes another car analogy), sold you a car for $30,000.00, you have a million dollar home for collateral. Your worthless brother in law runs off with the car. You are having cash flow issues, and can't really afford to make the payments. Why should the car lot forgive you this loan?
They entered into a business deal with a party who had the ability to pay. Just the party mismanaged things and has the sob story, why should IBM have to eat it? Because "they can afford it" just does not cut it. IBM could also afford to cash out, take the money and run. To not sell hardware to anybody any more. But no, they are staying in business to do business. They are not extorting their customers. They should not have to eat it. Let the tax payers who allow such government pay for it.
Re:15 years (Score:4, Funny)
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Also, I noticed the state got their money before asking IBM to forgive its debts. Why doesn't IBM ask the state to give their money back as well?
Re:15 years (Score:4, Funny)
From 15 years ago are the bad guys, unless they've lost the records of who was on the board back then too.
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So create a special tax district to pay the money off from the people who live in the school district (which is quite wealthy) and tell them it's because they voted the wrong board into office.
Maybe they'll pay a little more attention to their local elections next time.
Forgiven because it's forgotten ? (Score:2)
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Do you mean Contra Costa? (Score:3, Insightful)
Do you mean Contra Costa?
How do you lose that much computer equipment? It must have walked off.
Re:Do you mean Contra Costa? (Score:5, Informative)
The office I worked in as a intern had the exact same problem. They made out an order for 50 IBM PC's for a training room. Instead, they received 50 IBM PS/2's that came
in huge palette sized boxes of 25 each. These had to be dismantled inside the container before we could take them out. As soon as our boss found out what they were, they were immediately returned.
This article [contracostatimes.com] seems to suggest a similar thing happened.
Nobody seems to know how many or what type of computers Marks ordered, or even whether they ended up being used. Several former district officials called them "obsolete" and "useless."
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Whether or not anyone can find the equipment or the documentation of the original order and delivery now, presumably the time to raise any question of the validity of the underlying debt was at the time of the discussions which led to the 1993 "long-term settlement", not 15 years later.
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Actually, under federal law, all you really need to do is write "Delivery rejected" on the outside of the unopened box.
I have heard the opposite is true (Score:4, Informative)
The upshot is that the shipper has the right to unload the goods on your sidewalk and walk away if you are being difficult. Obviously, they'd do all sorts of CYA stuff to document their actions - and this sort of ultimate action is never good for business. But in the end, the innocent third party has the right to walk away without burden (providing the shipping order doesn't place restrictions on the delivery. "Must be kept frozen" overrides "I waited five whole minutes for them to empty the freezer and then dropped the goods on the burning sidewalk."
It may be that you legally have the right to return the goods. But, you need to be careful about who has possession the goods, and have proof of transfer of possession.
Re:Do you mean Contra Costa? (Score:5, Informative)
did try and get the machines sent back.
Former school board member Frank Calton said he remembers the deal with IBM being touted by Marks as a mutually beneficial partnership.
"This was submitted to us as kind of a joint venture where IBM could showcase computers as learning tools for students," Calton said. "It was supposed to have a PR angle for IBM."
When asked by the Times last week, the district could not track down invoices for the purchases, so it is unclear how many and what type of computers were ordered. But administrators agree the computers already were outdated when the district got them.
"I think they were out of date before (Marks) even decided to buy them," Basalto said. "Every one of them was obsolete; they were absolutely useless."
Where the computers ended up also is a mystery. Basalto recalls that some were installed in schools, but some sat in warehouses, possibly never turned on.
The district tried to return some of the computers, said Ruth Vedovelli, West Contra Costa school district's current finance chief. IBM refused to take them back, leading to a years-long fight that also included battles over the actual cost.
Negotiations often got ugly, with Fred Stewart, the state trustee appointed to oversee the district's finances after it went into debt in 1990, often getting into shouting matches with IBM representatives, says Herb Cole, Marks' successor.
"He said, 'We can't pay you, so if you want them, come and get them,'" Cole said, adding that Stewart threatened to put the computers on the curb. "He was tough as nails with them at the time."
Stewart, who recently retired as the state trustee, declined to comment.
In late 1993 -- four years after the district agreed to buy the computers -- the parties reached a settlement that called for deferring the first major payment until 2008. That was the year the district, under its previous loan structure, was scheduled to be finished paying back $28.5 million it owed the state.
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Who wants to bet the obsolete equipment was delivered straight to a landfill, and the money split threeway between the IBM higherups, the police/mafia, and the legislature (plus a little something to keep the schoolboard and the auditors happy)?
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Nah, I think they mean the Cosa Nostra [wikipedia.org].
"Yeah, we'd appreciate it very much if you'd forget about that little debt we owe you for those computers that
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Even TFA seems badly confused, referring to the school district first as "the Contra Costa school district" and, in the next sentence, as "the West Contra Cost School District". TFA also is similary inconsistent in referring to the story in the Contra Costa Times from which TFA is apparently derived sometimes as a "Contra Cost Times story" and sometimes as a "Contra Costa story".
coondoggie seems to be just following TFA's "randomly dropping words out of proper names doesn't matter"
Excuses, escuses (Score:5, Funny)
signed,
Epstein's Mom
Re:Excuses, escuses (Score:5, Funny)
Shameful.
Coming soon to a cinema near you... (Score:4, Funny)
Bad Records (Score:5, Insightful)
Seriously instead of saying "let us off" they should be saying "here's your money, _please_ don't charge us interest or take us to court".
Re:Bad Records (Score:4, Interesting)
Wow, it's not often I feel sorry for IBM (Score:5, Insightful)
Re:Wow, it's not often I feel sorry for IBM (Score:5, Insightful)
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I bet the next time they will demand the payments be made in advance of the work being performed or the goods being delivered.
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It will probably be worth in the 10's of millions, IBM will have it set in stone and their massive legal team keeping an eye on it. Plus it will save them millions they would normally have to spend on tender.
Its all part of give and take. The lawmakers will not be bullying IBM, they will be doing it cover their own asses. Do you think they want to expain how they lost $5 millions dollars
Re:Wow, it's not often I feel sorry for IBM (Score:5, Insightful)
To me this seems like gross mismanagement of funds on the part of the school board. And, frankly, forgiving their debt will not compel them to manage their funds any better in the future.
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On the contrary, it'll just encourage them to do the same thing in the future.
The only time anything changes in the U.S. is during or immediately after a major bloodletting. If you want stuff to change, heads have to roll. Sometimes figuratively (incarceration, financial ruination, humiliation), sometimes more literally. The town/city needs to be forced to pay this, they need to blow their budget, they nee
Re:Wow, it's not often I feel sorry for IBM (Score:5, Interesting)
When it comes down to the asshattery of the administration of the time..there's a lot to go around. The superintendent, Walter Marks, took whatever funds he could to further a pet project called open schooling, which may have been one of the forebearers of the proposed voucher schemes. The different campuses were given specific lines of study, and students were given the choice to go to the school that interested them the most. For example, Pinole Valley HS was given the Dramatic Arts line, while at the same time, all musical and arts classes were cut dramatically at other schools across the district. El Cerrito HS, if I remember right, was given Math & Sciences, while those same courses were underfunded at other schools. Parents could simply not afford to send their children to schools that weren't local, helping to foment serious student disenfranchisement and furthering dropout rates.
The asshattery continued in the state assembly, where Sup. Marks was given high praise by the Secretary of Education, William Bennett. Secretary Bennett felt that this disjointed and disenfranchising method of splitting the district was a model for urban school reform. Sup. Marks was given high praise nationwide for bankrupting the district. Marks was able to find a higher paying job in Kansas City after being fired at the height of the scandal.
All that being said, I still think that the district should pay the debt. The question is, where will the money come from? Can't get them from the teachers, or you won't have any teachers. Can't get an appropriate amount from property taxes, due to proposition 103. There's simply not enough cirriculum to cut back. I wish there was an easy answer that didn't affect students adversely, but I simply don't believe there is.
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The STATE just finished making the district repay loans for 15 years. So, when the government is owned money you better pay up, but when IBM is owed money the state turns around and recommends forgiveness?
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See: http://en.wikipedia.org/wiki/West_Contra_Costa_Uni fied_School_District [wikipedia.org]
In 1990, the District was over $40 million in debt. Currently, they are still $7 million behind, not including the IBM debts. Make no mistake, they are trying to pay their debts, bu
I really hate these type of arguments... (Score:5, Insightful)
Oh, so that makes it OK to rip IBM off.
Well, "honorable" lawmakers, how many of your teacher's pensions are in IBM stock?
Or what about your investments?
Or some of your other constituents - many who are retired and are relying on IBM making an actual profit in order to make money on their retirement investments.
Not all stock investors are rich, fat, white, dudes who nobody has pity for.
Mental note: Do not give credit to the CA schools - cash only.
Re:I really hate these type of arguments... (Score:5, Informative)
60.6% of IBM stock is held by institutions such as pension funds according to their latest report.
Which implies... (Score:4, Insightful)
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Heh, knowing how some government pension funds are being run (San Diego [econbrowser.com]), I wouldn't be surprised if the State of California has a big stake in some hedge fund that's short-selling IBM.
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The mood certainly wasn't as forgiving of the affected party when Slashdork ran that piece the other day about the Indian ISVs pirating Windows because, well, it was just too darn expensive.
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Of course that's an unpopular POV around here, but wishes and reality are two very different things. Who knows, maybe one day that will change. But until then, a thousand slashbots patting each other in the back with "gee, wouldn't it be great if..." theories make absolutely no dif
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This is 100% the fault of the school district administrators, 0% the fault of IBM, and if there are any fit rich whit
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Wow (Score:4, Funny)
On a serious note, I am surprised at no mention of paying a smaller amount or anything.. No they expect IBM to just forget about the whole thing.
Cant "find" the computers? Then... (Score:4, Insightful)
"What you subsidize, you get more of".
Have the school district *try* a little harder to find out where it all went.... a good first step.
If the taxpayers het mad enough at the failure to do this, *then* you'll get some accountability, although late.
BWilde
Re:Cant "find" the computers? Then... (Score:5, Insightful)
If the audit is completed, and if the district makes its payments on time, IBM could then make a $5 million charitable donation to the district.
That way, IBM would get good press, the district would hopefully straighten up their records, and everyone would be happy.
$5 million computers NEVER USED? (Score:5, Interesting)
If it wasn't for the fact that the administrators that created this mess are probably all not working there anymore, I'd say they should pay the full amount, with interest, as punishment for wasting the taxpayers dollars!
Not only that (Score:2)
Forgiving the dept and not forcing an investigation seems to encourage negligence and corruption, indeed.
Re:$5 million computers NEVER USED? (Score:4, Funny)
Man, relax! This was the late-80s... $5M probably bought about a dozen computers (EGA monitors, 20MB hard drives and 2400bps modems not included). Besides, the "unavailable" hardware and proofs of purchase are probably just cover-ups for someone having lost one or both while on a three-week cocaine bender.
Ah, those halcyon days.
Paperwork? (Score:3, Funny)
Rewarding corruption (Score:3, Insightful)
What a vague article (Score:5, Insightful)
Besides...lets say they were using the computers. How does the fact that they're missing affect whether they can pay for them? Surely the district didn't place a $5 million order with no means to pay for it?
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True.
I can see it now.
School orders $5 mil in equip. Months later it shows up, but is delivered to wrong building. Someone who doesn't know what it's for accepts it and forgets about it. Paperwork is never processed. School calls IBM in a few more months and wants equipment. IBM says you've got it. School says, no, we don't. Project gets reevaluated and the money gets spent on something else.
Months (or years) later,
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Bwahahahahaha!!!! Somebody mod this guy "+1 Funny"
Oh, wait - you were serious? Wow. Can I suggegest meds for those delusions?
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Considering that the district declared bankruptcy not long after these orders occurred, I think that's exactly what happened.
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IBM should just turn it over (Score:5, Insightful)
Cut 'Em Off (Score:3, Insightful)
Re:Cut 'Em Off (Score:4, Informative)
This is no joke - literally billions of people are endangered by well-meaning but ultimately foolish decisions like this.
More money is not the solution to any of the world's current problems. US public education is actually an incontrovertible proof of this - a prototypical example.
Brett
IBM bent over backwards (Score:4, Insightful)
What sort of example are they trying to set?
Pay Up (Score:4, Insightful)
For one reason or another? (Score:5, Interesting)
What a load of crap (Score:5, Insightful)
If every dollar is precious, they should've thought twice before spending $5 million in hardware that was never even used!
This district's atrocious conduct is precisely the reason why IBM should not forgive the debt.
Well, these are politicians we're talking about (Score:4, Interesting)
IBM has been more than fair. They are owed their money. Mistakes are made, but unless the consquences are paid they will happen again.
Let me see if I understand this (Score:5, Insightful)
Meanwhile, the State of California has insisted on, and gotten, much stricter terms (including interest.)
Now, the State is suggesting that IBM should forgive their loan altogether?
Maybe, if forgiving those loans is so good an idea, the State of California should go first?
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No, the State is not. 4 out of 120 state legislators, representing West Contra Costa County and nearby areas, are. Big difference.
It's not too unfair (Score:2, Insightful)
The school will have difficulty paying the money back. The owed money may end up being written off anyway.
Nobody is forcing anyone to do anything. There's a lot of pressure being applied but it's up to IBM, and IBM can benefit from this. They'll get some of the money back as a tax break, more as good PR, and this will mean more money for the school to spend education, which will benefit IBM in the long run. That, and the person who makes the de
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Nobody is forcing anyone to do anything.
Sure, the CA legislature isn't going to allow any 'lack of cooperation' on IBM's part influence future contracts. There won't be any sudden desire to 're-evaluate' any purchasing schedules that IBM might have a piece of. Nah.
which will benefit IBM in the long run
Teaching your customers that you roll over and write off invoices is a great business precedent. I know I won't mind when one of my employer's govt contracts just walks away with the product.
Grown-ups understand that when some podunk school district runs itself into the ground the
Mismanagement is not an excuse (Score:2)
contra costa country (Score:5, Informative)
"of course, it's worth pointing out that Contra Costa County is the predominant county and tax base for the East Bay -- a sprawling set of towns/cities full of people that work in downtown San Francisco, Oakland, and Silicon Valley. It's the same county where median home prices for most of the towns are well north of $500,000.
To quote the Contra Costa website: "Due to the presence of relatively high-wage skilled jobs and relatively wealthy residents, the County achieves high rankings among all California counties on a variety of income measurements."
This isn't the story of an impoverish[ed] county begging for debt relief from an evil corporation. Move along."
A tale of two counties (Score:4, Informative)
Contra Costa County is broken up into Multiple School Districts [k12.ca.us]. This story is about the West Contra Costa School District, which serves communities such as Richmond & San Pablo. I don't know specifics off the top of my head, but it is one of the poorest school districts in California.
Contra Costa County is a tale of two counties. Eastern Contra Costa County is as you described, with many wealthy suburbs, wealthy inhabitants and well-funded schools. This is the image that Contra Costa County would like to promote on it's website.
Western Contra Costa County is much poorer, with poorly funded schools & high crime rates. Richmond has a disturbing level of corruption in the government. Compare these two cities:
* Richmond [wikipedia.org]Walnut CreekAbout 1.7% of families and 3.7% of the population were below the poverty line
I travel in both areas of Contra Costa Country regularly, and I'm always amazed at the difference. Walnut Creek has beautiful, clean schools located close to grass-covered golden hills. Many Richmond schools have a ton of graffiti, broken windows, boarded-up buildings, etc. Several times a year, schools in the parts of the Western Contra Costa County School district go into 'lockdown' mode due to leaks at the nearby chemical plants or oil refineries. Drive by shootings happen near the schools. In Richmond, you can hear gunshots just about every night.
Could It be They Don't Want to Pay? (Score:3, Interesting)
At what point does this cross over from "poor school district" to clever constituents trying to get out of a deal?
I doubt this would happen in, say, compton CA.http://www.city-data.com/city/Compton-Californ
I went to school there (Score:5, Informative)
The basic problem is, in 1992, they got a superintendant who was going to revolutionize everything. New schools, new ways of doing things, the works.
He turned out to be a corrupt bastard, but he disappeared without ever having to pay or atone for anything, and the people who use the schools have been paying for it ever since.
The school district is broke as hell, and quite honestly, will probably go bankrupt before they pay IBM (if by 'pay' you mean 'pay in the next 50 years').
All the other comments here seem to be going 'lol pay up already', but it's not that simple. IBM should forgive the debt, and everyone should learn a lesson from this:
Don't let public institutions pay with credit. The people who make decisions are not held responsible, and thus do not make responsible decisions. They will rip you off, and rip off the people they are supposed to be representing.
Rewarding bad behavior (Score:5, Insightful)
Need more INFO! (Score:2)
Let's think about this a minute (Score:3, Funny)
The school owes IBM money and California farmers are paying higher prices for farm labor because of the border crack down. I say have the school send all the kids out to harvest lettuce and have their wages go to pay back IBM. They even have school buses to drive them out to the fields. Might have to chain them together so they don't wander off and get lost and we could make their parents buy them little orange jumpsuits so we could spot them if they tried running off.
The farmers get cheap labor, IBM gets its money and the kids all learn to swing a lettuce knife with deadly accuracy before they get to high school. Okay, a few of them will lose fingers, maybe hack a little arm off. Bo-ho liberal whiners. Here's a bandaid. It's a win-win-win for everyone.
If it works out we could start renting them out to companies doing asbestos remediation, hauling trash, put them to work in shoe factories and get those back in the US again! Then we could take all that money they're making and role back the property taxes for all us old people.
This is brilliant! Brilliant I tell ya!
IBM already did them a favor (Score:3, Insightful)
So the fact that IBM did NOT do this means they have a heart. Don't be stupid and keep on asking for more. IBM is a business, and if they let this customer go, they would simply have more problems in the future.
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No... (Score:5, Informative)
Re:No... (Score:5, Interesting)
This school district has been able to defer this debt for over 15 years. Where is my 15 year, interest free $5 million loan? I want a piece of that action.
If we want to talk about bail outs, why not have the state of California bail out the school district? Why not have the citizens of that school district pass the collection hat round and round till they come up with the money?
I'm sure there are going to be lots of "think of the poor children" arguments about this. It is real easy to have sympathy when it isn't your $5 million at stake.
Re:No... (Score:5, Informative)
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That's for sure. Back in my day, we played baseball the way it was meant to be played: with rocks, in the middle of busy streets. And we were damn happy. Football was about the same, but bigger rocks, and on the interstate. How many times have you been tackled by a '47 Buick goin' 55 miles per hour? Yeah, it sucked. But did you hear us complaining? Hell no. And don't even get me started on basketball. Have you ever tried to dribble a rock? That's right. You haven't. Back then, "Go play outside"
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Re:No... (Score:5, Informative)
The problem with giving money to schools is that school administrators tend to *always* spend it on glossy paint, then when the money is gone they turn around and complain about the books that they didn't buy when they had the money.
A perfect example of this is the recent teacher pay raise in Utah. The teachers union (and basically everyone else) complained about teacher salaries so $100 million was raised to bump every teacher's salary by $2500 and give them a $1000 bonus. The school districts immediately began planning to spend that money on everything but pay increases. This has forced the legislature to audit the various districts to ensure that the teachers actually receive the money.
I am sure that the school districts planned to simply continue doing the same thing that they have done for years. The plan undoubtedly was to complain about teacher pay, get more money from the legislature, and then spend the new funds on everything but teach salaries allowing them to complain about teacher pay the next year.
What we really need are school vouchers. If there is one thing that public schools across the country continue to prove it is that the government does a poor job of providing education.
Re:No... (Score:5, Interesting)
Even a cursory reading of the Founders' beliefs and thoughts on the US Federal Government was that states are individual entities, experiments in diversity of regional and local government (yes, right down to their budgets - otherwise, states and locales would've never been allowed to levy taxes, and everything would've been disbursed from Federal revenues all this time). The common bond was that they accepted and abided by a common set of rules (e.g. the US Constitution), and pitched in together on Federal matters (Defense, taxation/tarriffs, infrastructure, etc), each according to their ability and population.
Large-scale Disasters (Katrina), local debts incurred from assisting in (or cleaning up after) national emergencies (e.g. 9/11 or Oklahoma City), or debts incurred by the actions or mishaps any federal agency or branch makes in a locale (say, a fighter jet plowing into something accidentally)? No problem - totally cool with the Feds helping out in the money department.
Bailing out the bad decisions made by a pack of politicians at some distant city council? Nope: they dug their hole - they can float bonds or raise property taxes to un-dig themselves out of it. If I have no vote or say in how that California county spends its discretionary budget, why should I (some random taxpayer up in Oregon) be liable for their mistakes?
After all, if you or I do something dumb and run up a mountain of unpayable debt, the Feds certainly wouldn't be breaking their necks to bail us out... so why should cities and/or counties have such a privilege?
Re:No... (Score:4, Insightful)
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I can't tell how you feel about the issue just by your post. Personally, I feel that the idea of keeping as much power as feasible at the state and local levels is a good idea. It gives people more power to influence the policies that affect them. Its easier to change that policy when you're voting against 1 million or 30 million, instea
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On an acute basis, we need concentrated power. Once people are ensconced, they want to wield their power on a chronic basis. It's too easy to ignore the creeping acquisition of power.
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I don't understand something. Is there any proof that the computers were ever delivered?
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I bet IBM has proof.
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Given that, why didn't they offer this proof when the newspaper called, thus making the whole thing a moot point?
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Actually,.... (Score:5, Interesting)
Re:Actually,.... (Score:5, Informative)
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